it is probably close to twice that in the army. i can hope that several things happened. that is the results of sequestration, but also the current continuing resolution. that is the results of sequestration, but also the current continuing resolution. we might see some action on either one. if neither of them get fixed and it goes through the year in its current form, we will have serious readiness of facts. -- effects. these are legally binding limits. we will have to cut back on training significantly. >> when the service chiefs were pushed, they said they could move money around further. is that an option for readiness? >> we could try, but the only means of doing that was reprogramming, using very limited techniques.

for every dollar that you add, you have to cut somewhere else. especially in an environment like this one, with sequestration cuts in investment accounts, there are not a lot of good sources. you have to get a member of congress to agree to this, at least all the committees. so, it cannot be anything contentious. it is not realistic to move multiple billions of legal limits on transfer authority. could some of this change? yes. congress can change the laws in ways that make this easier. we are doing worst-case planning right now, that is a fair statement. but if the cr stays in effect for the whole year, we will see serious attacks. >> if i can follow up and add, if we do follow these civilian employees, they are the ones

that maintain our equipment in a lot of our depots. they have a lot of ranges on posts. if furloughed, they will love be -- they will not be there for that training environment. it is the second and third quarter. it is not the training dollars that can be potentially preprogrammed. it is the people for their to utilize and perform the job they're required to do. >> the measures you are talking about are fairly drastic. why wait until today to make these announcements? do you accept the criticism that the pentagon should have been warning about these sooner? >> first, we started the slowdown in spending on january 10.

a number of the measures that i mentioned went into effect shortly after that. significant efforts were made to slow down spending on more draconian actions later. i know that people felt we should have said more earlier. 15 months ago the secretary sent a letter to the u.s. congress saying that the effects of sequestration would be devastating. that was october 2011. after that we testified in august and again in september, we listed every single major item we're talking about. we said that there would be cutbacks in readiness and a unit buys would go down with unit costs growing up. what we did not do was detailed budget planning. i do not regret that. if we did it 60 months ago, we would have been wrong. we would not know that congress would have changed the size and the date and we would not have

incurred the degradation route. we sounded the alarm in every way that we could. >> what kind of contract are you having with the white house? -- contact are you having with the white house? are you trying to offer up any solutions? sequestration confined to savings hear, hear, and here? what other things would you be doing right now? >> talking to my wife. [laughter] let the answer the first question. i do not think i am of best person that answer. we were very interested in a

closely monitoring the events. a more serious answer than spending time with my wife? when i first took this job, it was the last job that i took. i was told that i would be consumed by the operating side. improving information within the department. others are getting short shrift right now, others are pretty much totally consumed with the department getting through this. >> if this is going to happen and hurt so bad, what about the option of getting to this goal?

would that be a strategy for you guys? let's do this instead? >> i think the president and republicans have made proposals. the implication on bargaining, i am probably not the right guy to be speaking to that, though i am potentially interested in the outcome. >> can you explain the rationale? >> the government enforces agreements and would require some negotiation and in some cases they are paid almost a entirely by the foreign government. [inaudible] that would not help us much. these are all overseas, japanese employees overseas.

>> one of the more important benefits is medical care. you mentioned that 40% of the folks were provided with care. that is going to cut into the services provided, i would think, like elective surgery is being canceled or postponed. what affect is that going to have? you could have thrown that on to tricare. that would be affected also, correct? >> everything is going to be affected, if sequestration goes into effect. that is a guarantee. everyone will be impacted by this action. it is incumbent upon us to try to ease that where we can. so, yes, 40% of our medical providers are civilian employees. a couple of things. the war has changed. there are fewer uniform providers in the war zones.

more within the confines of medical treatment facilities. that is one benefit. it is incumbent upon us to review the plan of the doctor, surgeons, and services to decide how we will best provide care and access to care. so, we will do that. i would like to be able to give you more specifics, but until i see those plans, though -- that would be speculating and that would not be fair. march 1 i will have a better understanding of how we will provide the access and care to our beneficiaries. >> even if sequestration comes in, we are all talking about just going through september 2013. what happens next year? does it get better?

they said that there was not enough time left this year to do that. >> i cannot rule it out. the budget control act requires that the caps on discretionary funding be lowered to $55 billion per year. if those come to pass, then we will have to look at a new defense strategy. that will be the first thing we will do. at that point we will be talking about significant reductions in the size of the military and civilian work force. flexing a new strategy as opposed to these across-the- board cuts that we face right now. >> [inaudible]

>> potentially we could hope for some sort of big budget deal. i would devoutly wish for some budget stability right? -- right now. i think it would benefit the department and the nation. but absent a deal of that sort, many people continue to face uncertainty into the future. >> we have time for a couple more. >> what kind of impact will there be on the contractor working for us? >> there are a lot of private sector agencies that have made job loss numbers. i will let them speak for themselves. for sequestration we need to take $46 billion. there would be some additional savings and i do not know for sure what they would be.

but there will be $40 billion or so accommodated by cutbacks and purchases in the private sector. lots of different kinds. there will be very substantial a fax on the private sector as well. i cannot give you a job loss numbers. there are a number of private organizations that have made estimates. >> what specific changes to the law would you like to see congress make to give you more flexibility in managing this challenge? what kind of cuts are you having to make? in fy-2014? >> first off, the change what the u.s. congress to make is to pass a balanced budget deficit reduction package and pass appropriations bills. that is what i would like for christmas. i know that it is late, but i would like it.

that is what would solve our problem. in terms of flexibility, you know, we are five months into the fiscal year. even if we said you could do it wherever you want, we would have to go after just about every dollar that is not obligated to get the cuts that quickly. i know that there have been suggestions that we could solve this problem by giving flexibility. i do not think it would help that much this far into the fiscal year. i think it is a bad deal, the flexibility. as far as the future at the moment, the guidance we have is not to plan for these large cuts that could occur under the budget control act. if congress does not make a change that the president can accept, yes, we would have to come are related to the other question, look at a smaller

smaller civilian workforce. >> what number are you planning for in fiscal year 14? >> i cannot give you that until they release the budget, but it is not too far off from the numbers we were planning one year ago. >> [inaudible] >> i wish that i knew. but they said that in march there would make this decision and i do not have that specific date. i beliebeve they said mid march. >> let me try once more specifically on the service contractor work force. seems like a pretty solid plan. how they will contribute, there is a similar detailed plan, of course. >> it is managed differently. they of course manage their own work force, so we would not be involved in that.

we are developing plans with increasing level of details for detail of what we would buy from the private sector and are in the process of looking at our investment programs. it takes a lot of work to figure out what we would not do to accommodate sequestration cuts. we are moving along well. under the law we have a detailed plan by april 1st that would give more fidelity on executive changes. in terms of managing work force, that will be done by the private companies. >> [inaudible] >> we expect to rollout the base budget in pieces. >> i think that as possible.

we need two decisions the we are getting now from the state of the union. -- after the state of the union. we still have to get the budget together. they may not come out together. i do not like the timing of the release. they may come out separately. >> [inaudible]you are exempting military personnel with some civilians, what percent -- and is not just 20% of the last half year, what is the size of the pie your cutting? >> i see what you mean. the problem is the investment accounts.

divide $46 billion by 5/12, but that would not be right. i do not know that i have that number in my head. i would guess that we are one quarter obligated abroad right now? so, we have three quarters left. but do not hold that to me too closely. but it is probably in that ballpark. >> folks, thank you again. thank you for all the questions. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> in a few moments, a university of chicago on the presidential campaign. in less than two hours, the former director of the cia michael hayden. and then the yahoo ceo marissa mayer talks about technology.

>> several live events tomorrow. the george university law center had a daylong forum on c- span 2 double be on tomorrow at 9:30 a.m. eastern -- that will be on tomorrow at 9:30 a.m. eastern. i'm c-span, members of the democratic steering policy committee looks at sequestration. it will affect federal workers. that is at 2:30 p.m. eastern. >> from the start, we told the board the approach we would take. it was pretty straightforward. that was the mission. go make this a viable company again.

we were all focused. we brought the message that we would sell the best vehicles. we would do it quickly. we need your support. we need your input. we changed a few things about the board meeting. we shorten them considerably. we stayed away from the details or did not give it a week on how to build a car. the bigger questions of financing and morale and position marketing. that sort of thing. the board was very supportive. we kept them informed. you know, we took off. >> leading general motors through bankruptcy and a government bailout. former chairman and ceo, ed whi tacre. part of "book tv." like us on facebook. >> now strategist for the obama

and romney campaigns. they discuss the primaries, polling, conventions, and convection nights trade -- election nights. this is moderated by chuck todd. [applause] >> good evening. i'm the student engagement chair for the student advisory council. we create excitement and political community involvement in many ways, helping provide avenues for this type of engagement across campus. it has become clear that getting involved in politics is important to fostering good citizens and leaders. many of our students were directly involved with the presidential campaigns of the past year.

through internships and going door-to-door, advocating for their candidates carried even more students were indirectly involved in the campaigns whether they tweeted, facebooke d, everyone knew about the election. in reality, the campaign can become complicated when we zoom out and analyze all of the factors that are required to orchestrate this at a national scale. it is an understatement to say that running a presidential campaign is a difficult piece in the political system. we have speakers who are experts on this trade. in alphabetical order, these are the speakers -- david axelrod shifted to political consulting in the mid1980's. his role is senior strategist for the 2012 campaign.

he is currently the founder and institute director for the university of chicago. eric fehrnstrom began as a reporter for the boston herald. afterward, he became the then current medications director for mitt romney and was a top aide in strategist for the romney campaign. larry grisolano has been involved in politics and campaigns for the past 30 years. he has been involved in some of the most important political battles both in 2008 and 2012 elections. he served in the obama campaign shared jim messin. jim messina quickly rose to prominence across the country. he became the obama deputy chief of staff for 2009 and went on to become the manager of the obama reelection campaign in 2012 d.

she work with governor romney where she then served as his chief of staff and was a top adviser for the romney campaign. ms. myers is one of the inaugural fellows. in 2008, she served as a battleground state erector for the obama campaign. matt rhoades has been a lead strategist for the republican national committee. he was a research analyst in the 2000 elections. he was the director of research for the 2004 bush campaign. he was the campaign manager for romney. stuart stephens has gone on to elect more governors than any other current republican media consultant.

he has also worked on campaigns overseas. he was involved in that media image for romney in 2008 and was a senior strategist for the presidential campaign in 2012. finally, our moderator for tonight is mr. chuck todd. he has experience as an editor and is an on-air political analyst. he is the current role of the chief white house correspondent for nbc. the panel will cover the 2012 election and campaign on a macro level and we will shed the light on what went right, what went wrong, and what went unexpectedly. we would like to thank strategist for giving us to host them. the caliber and expertise of the guests is extraordinary. it is an honor to introduce all of them for what should be a fruitful discussion.

ladies and gentlemen, thank you for coming. please join me in welcoming our distinguished guests. [applause] >> am i supposed to begin? all right. so, i'm a little concerned. eight people, 90 minutes. i think matt said, it is like another republican debate. [laughter] we will do our best.

do not suck up too much time. want to hear from everyone. i want to begin with -- when did someone decide to run for president? how does that conversation take place? i want to start with stuart. when did you have the conversation with governor romney? a lot of us assumed he was running for president the whole time. when did he decide to run? when did he tell you? when was it clear it was time to go? >> there is a great misconception that he land immediately afterwards. this assumption was that the economy would continue to improve or would improve.

i think running and losing in 2008 was liberating for him. he found that he could be happy. week at talking -- we kept talking. he wanted to talk about it. we had a busy 2010 client schedule shoul. he finally said, on election day 2010, if you cannot do anything for your client, why don't we meet? ok. we can do that. my partner and i met him. we met him in boston. that was when i got a sense that

he was intending to run. >> he was serious? and he made the decision? >> yet. >> covering -- yeah. >> covering the white house, he always viewed mitt romney is the face of the republican party. is that unfair? >> no. after the 2008 election, we were thinking about the future. he asked me who i thought the nominee would be in 20 20. i said, mitt romney. i knew we were heading into an economic maelstrom. i spoke earlier to a group about this opposites theory of presidential races. romney and the business background seem like the kind of person who could emerge from

that. on election day, that election sort of altered my thinking. it was clear he to me that there were forces in every public and party that would control that nomination process. it would be challenging for any nominee to navigate those forces. they would have to make difficult choices in order to be the nominee. there was an element of doubt. we did think it was the likely guy. >> was there every sign you that he would not do it? >> yeah. he had really relaxed in 2009 ya. nn had a health scare.

so, 2009, who knows. the time that i came to think that he was looking to run was right after the scott brown race when he sat down with eric and said we need to get another person. . let's talk to matt rhoades. i thought that was a pretty good indication that he was very serious about thinking of running. >> i was with governor romney in 2008 during that presidential campaign. on the plane back to washington , he was busy trying to arrange people's lives. he did not sound like a person who was plotting another run.

he seemed exhausted by politics. but then there were developments that happened. the chris christie victory in new jersey. bob mcdonnell victory in virginia. seems like republicans were on a march and playing defense on issues relating to the economy. i think mitt felt in 2011 that he was compelled to get involved. with respect to his skills and jobs and the economy. that is why he got in at that precise moment. >> when he said the light switch went on? >> i do not think so. it is a process that happens over time. there are a number of factors to take into account. matt came up and we knew that he

was moving in that direction. >> you are in the white house. .ou're a political junkie an what was your -- did you find yourself obsessively following romney and the republicans? >> i think david has it right. we thought for a long time it would be romney. we would bring a republican from 1-10. we always viewed it as him. -- rank a republican from 1-10. be always you did as him -- we always viewed it as him. he would be a formidable candidate.

we would say to ourselves, can it run me get through this primary? it turned out to be longer than we thought -- you can mitt romney -- can mitt romney get through this primary? internet now to be longer than we thought it would be. >-- it turned out to be longer than we ought it would be. > >> it was when period wasn't getting hit by those brutal snowstorms. -- was getting hit by those brutal snowstorms. he was asking whether or not i would come up. he was talking about taking it up a notch. as the digital campaigns are a little bit different --

presidential campaigns are a little bit different. you go through this period were you think about running for president. you finally come to the conclusion, i will run. did take it up afinall notch. he had a book that he was about to roll out. he asked me that they. -- day. when someone offers you something, you have to say, i have to think about it erie . the next day we were off and running. it all just happened. but the time i became campaign manager, i do not remember sitting down and having a formal interview. for better or worse, a kind of happened. >> david and jim, when did you

going to reelect mode? in some form or another? >> it is sort of a sensation that got us going. >> 2010 election? >> no. the debt ceiling fight. there were thoughts. >> when did you move to chicago? >> it kicked into high gear. jim was putting the mechanisms into place. we were doing the things that had to be done. i think everyone that very focused, at least on the message side. the debt ceiling fight pr, the numbers were as bad as they were throughout the whole presidency.

the predecessors in washington were swirling around. our folks were nervous. it is clear that we were now in a situation where we had a fight and had to pull out of it. >> but the mechanism -- >> the mechanical things had to be done. we knew there'd be a big red married. we would -- there would be a big primary. it would come down to our advantage in terms of organization. >> when did you begin operationally? to do the programs and other things? >> i was there for 2009 and 2010. we knew what would come for the reelect. there were a lot of things that were under the radar.

building on some of the internal polling that we did and really honing our 50 state strategy and training volunteers and doing something to empower them. all of those things started really quickly after the president won his first election. we built off of that once we got to chicago. >> what about building this infrastructure? >> i showed up in april on a full-time basis. we started very early in april or may doing very intensive research. we tried to get a handle on what people were thinking out there. this was before the debt ceiling stuff. we knew people were wary of the economy. we wanted to see how we fit in and what was going on on the other side.

by the time the debt ceiling hit, we had a good sense of the landscape. the debt ceiling, we were kind of galvanized in this cohesion to move forward. >> stewart, what was your assumption of what the primary would be about before the announcement speech? writing all of that -- the public does not realize. you go back to the obama announcement speech. it lays out the entire message of the campaign. you are working on that and the governor is working on that. >> we talked about this a lot. we had a premise that we would not have an announcement speech

that you could give the day before the general election. that was our goal. we got that the reagan announcement speech and used as a model. it was one that was successful. it was a model of the speech that president reagan gave the day before. it was in the general election. we always believe that we wanted the primary to be about the economy. mitt romney would be that candidate of the economy. to beat mitt romney, you had to beat him on the economy. every candidate would have to trump them on that. we woulere fairly confident it could do that. the process of the primary would

be a referendum on who was best suited to beat barack obama and face him. not in an electability sense, but in a asthmatic sense. -- pragmatic sense. it is not one of those primaries where you go off and talking about -- and talk about why in a general election. was the theory. when you go back and read the announcement speech, it could have been given before the general election. >> larry mentioned research that we were doing and i think that we would agree that we believe the race would be about the economy in some form or fashion. >> what is the definition of

what the economy was? >> all of the research that we did was largely about the way that people saw the economy from their own experience. there is this general sense that the middle class felt. there was real anger about wall street and the forces that they felt that were conspiring against them. we knew that we had an object that is to define the economy in our own terms. also the race to the last day, that definition of economic challenges was the census of the whole campaign. >> you guys were repairing to -- preparing to -- >> i know what you want me to stay. [laughter]

>> remember that whole, you know? >> sometimes it is more important to begin the process of thinking of running for president. when you are in a primary, you cannot worry. look into their own decisions -- people came to their own decisions. i certainly think that winning the nomination is always tougher than anyone thinks it is, even if there is a front runner. i saw how brutal the primary process was. i had the opportunity to work for president bush in 2004. we had a lot of opportunity to look at that. jacif you put our rankings

together, john kerry would always be on top. there is those the inevitability of something happening in the primary that could shake everything up. there's no point to worry about one individual. you have got to get in it. you cannot worry. >> did governor romney ever express to you -- >> rick perry got in late. there is someone else that would get in the race. you do not know hwho it will be. when rick perry got in, that this when we got -- >> did you know so what else was going to run? on the republican side? -- someone else was going to

run? on the republican side? >> you look at new is in the race and you prepare for that. -- who is in the race and you prepare for that. >> like he was looking for a way to run? >> you could see there were some intellectual space. you could see him try to get their eare. >> did governor -- he was the only talking about other people getting in. i'm sure it did not make you guys very happy. you remember governor romney calling governor daniels, are you in or out? >> what matt said his too. we do not sit around at the headquarters. -- you heard what that said.

we do not sit around at the headquarters. it never influenced our way of thinking in one way or another. >> within days of you guys announcing -- it was a couple of weeks before. explained the thinking behind why you felt the need to do when you did it. >> there was a lot of pressure internally in the party. whether or not the governor would change his position or what his position would be. it was important to get that off the table. let the chips fall where they may. >> do you feel like it got off

the table? >> he became the nominee. healthcare was one of the major obstacles. what he put in place in massachusetts and what the president did for the national healthcare plan plan -- without there were meaningful differences. -- we got there were meaningful differences. mitt said this is the insight that make the math work. white do we not redirect that money and use it to subsidize health insurance for people who need assistance in buying their own coverage? that is different than the financing tokenism in the president's health care program. [talking over each other] >> it is out of pejorative.

[laughter] >> that is what we worked on. i think we made persuasive arguments. far more persuasive was economic condition of the economy. in our view, romney had superior job creation skills. >> jim, it looks like you guys are finding ways to talk about romney's health care. it was like, you use that to almost -- is that a fair -- >> we talked about his record. >> thank you for your help. >> it was strategic. anytime you talk about healthcare, you would mention romney. >> make sure people that understood the similarities between the two plans.

it was easy to go to. >> it was important to do that while he was in the republican primary. we wanted to make the process as long and as challenging for him. we understood that he would alternately be the nominee. without creating mischief was good. there is no doubt about it. much of the republican angst was built around opposition to the health care plan. it was a natural thing for his opponents to attack him for it. i know a lot of republicans didn't. >> in a we seem to me that you guys are waiting as long as you possibly could. -- it seemed to me that you guys were waiting as long as you possibly could. you engage on a staff level.

>> september debates, when he looked at the calendar and saw there were 22 primary debates -- >> performing the process -- reforming the process -- >> when we looked at the calendar, there were three debates in september. that is when we prepared for that. >> larry, did you guys use the primary debate as organizing tools? >> it was a double edged sword for us. folks are really engage. they wanted to get involved to see what issues were being discussed in the primary.

they wanted to volunteer. at the same time, we had folks saying the president -- >> the primary debate was taking the party too far? >> exactly. people do not want to get as engaged as they were in the past. they do not want to get involved early. that was a challenge. >> that is exactly right. we put michelle obama out there in a big way. is she really motivated the base. -- she really motivated the base. are people saying -- people saying, wake us up on the guy has a chance to meet us. >> what were you doing a debate nights? there were these national

conversations on politics. on one side, what were you guys trying to do? >> we are trying to wind of enter into the commentary -- enter -- we were trying to enter into the commentary. they wanted to see how the message was unfolding. there are things that we kept good notes on. >> you have been quoted on this before, the issue of immigration and going after rick peryry. you still stand by -- overreacting to perry? >> stuart says you have to go out and take it. at that moment in time during

the american assess, rick -- p rocess, rick perry was a very formidable opponent. we were running a campaign used on jobs and the economy. this is the governor of a state. people would say -- we knew he was formidable. process. the debate assess we did some in the debate. >> very aggressive early. >> early on. and when he had written about on security. i think he used the phrase fonzie scheme. >> he did.

-- ponzi scheme. >> he did. by the third debate and we open up immigration, i think we had tugged the strings on governor perry. he did not need to go into that space. i stand by what i said. hindsight is 202/20. >> when did you know that perry was done? >> when he got out. governor perry is a formidable candidate. >> he was the only one who had the ability. >> now, no. i disagree with that. -- no, no. i disagree with that. i think that for the republican

primaries, like santorum, he was much more in sync with that than senator clinton was. obviously senator santorum did not have the formidable apparatus that hillary clinton had. >> do you think that it had -- >> what do we know about the republican party? what do we know about mitt romney? [laughter] >> i think that is a testament. he did not begin this with a

national or geographical or ideological base. in those debates, through skill , he took positions that people disagreed with like healthcare, but he given is the republican party that he had the qualities that he wanted to be the nominee. >> every week it was the new whack a mole. .e went from perry to gingrich >> herman cain was next. >> and then he blew up at the bloomberg debates. who were these? where they? -- who were they? it seems like it was the same percentage of the electorate. >> governor perry was

formidable. senator santorum -- anyone who underestimates him --so much of running for president, the guys and gal to work the hardest -- senator santorum have the work ethic. plen>> the minute you say that,, that is right. [laughter] >> thank you. if we are going head to head, he could take away some of the votes that we were going to garner. if they were up against governor palenti at that moment, that would have been more challenging.

i think that was a 24 debate. >> 21 were on horrible networks. the good ones are on nbc. i know that. [laughter] >> is a pretty formidable debate opponent. -- he is a pretty formidable debate opponent. you have to go out. someone will be the anti--mitt or anti-kerry. it is at a different situation in 2008 with the anti-bush. people at certain points in the campaign were not completely ready to close the deal. they went shopping elsewhere. during the primary, our campaign did a good job at whack a mole

or whatever you want to call it. >> by the way, i went to give you credit. come one. -- come one. >> we were the campaign of people who were not even in the race. >> one guy was saying newt early on before anyone else did. >> he is an immensely talented individual. the impact of the super pacs -- there had been talks about the rnc. campaigns never end because people want them toend end. they end because people run out of money. no one wakes up and says, you

know, that is it. it is because they cannot keep the lights on or kepay staffers. super pacs elongated the race in ways we have never seen before. ronnie had super pac -- romney had super pac help. >> without the super pac, gingrich -- >> i think overall it served to keep candidates alive that would not have the fundraising ability otherwise. that is an important point when you study the whole rss. -- process. >> you guys made a decision to go the super pac route.

when did that hit you? >> i think david and jim can speak a little bit more to this. the system was set up in a way that we had to make sure that we won. it was clear. the biggest lesson i learned in 2010 in terms of the super pacs that they were incredibly corny needed and sophisticated. they all had money and they had very courted native messages. -- courted native messages. -- coordinated message. >> there were a lot of democrats campaigning when you would get that call should a lot of them

would complain. why are you doing this? >> two things. at that point, it was the right decision. it was true to who we were a. he had already gone out and said they were doing this super pac thing. >> they were running a democratic super pac. >> two former white house staffers hoping they would get blessed. >> there was an explosion of republican super pacs. they were courting the nra and all of these groups. i did a round of calls to people i trusted. i rode how much i thought they were going to spend it. i called david in. the number was $160 million. david said, we do have a meeting. we flipped soon after.

>> the reality is, you cannot play by two set of rules. it was a frightening thing. looking at his wife bore was a chilling experience. -- looking at is a white board was a chilling experience. in the primaries, he writes a $10 million check to newt gingrich who was flat out broke. he could be here on february 19 so mark your calendars. he was flat out busted broke. one guy went to his checkbook and wrote a check. he is back in the game. >> when did you know you had to be in the super pac game? you had to be in it? was there ever a doubt you were going to do this? >> i do not think there was ever a doubt. >> was it out of necessity or did you see it as a strategic

advantage? >> it was just an inevitability. jim had the luxury of portion of that decision. you guys were going to come to that decision sooner. >> did you figure you look into that decision? you you had to do this from the get go? >> we did not do it. >> that is what is so weird about this. there is the coordination that is not recorded nation. what is it? >> you could communicate what hundred 20 days before the first broadcast communication went up. -- 120 days before the first broad band communication went up. we did not have much -- before

the campaign existed it, before our feature existed. >> i think this whole question of the impact of these new roles as something that is greatly under appreciated. also, this is the first time we have not had funding. >> on either side. >> in 1976, we knew, which is part of the impetus of that federal funding, incumbent presidents were greatly advantaged because you have for years to raise all of this money. on our white board we had $1 billion, the amount of money we knew the old amah campaign was able to raise as an incumbent president. -- we do the obama campaign was able to raise as an incumbent president. but i want to throw some numbers at you. correct me if i am wrong because i believe your bush in 2000.

after the conventions, they each spent $64 million. i believe that was one week of advertising for both sides in 2012. that was not that long ago. the word got out on bush and a gore if i am not mistaken. people knew where everybody's dead. -- where everybody stood. >> you have 538 votes. >> i want to go to -- right before we get to the general election and to the rodney people. what was the scariest moment in the primaries? when we're thoughts -- we might lose this thing? was it the michigan primary? what was the o.s. moment? >> i do not think we wherever in fear of losing it. but the moment for me was south

carolina. >> losing it or the margin? >> putting newt gingrich back into the game. he was searching in iowa. he finished down in the pack their. he was fading. he got the check from children. he was out perform in south carolina. we never thought we would crack the south carolina egg. we did better in 2012 and 2008. it put newt in the driver's seat for a period of time and forced us to go to florida to turn on the jets. >> any other o.s. moment? >> i would say from a little bit later on from a budget standpoint, what i was responsible for, there were moments where it got further and

further along, there were some big states that cost a lot of money to put up on tv. there were certain moments in the campaign where we took our bank down close to zero. when you do that, there is a lot riding on you performing well in that state. week after week were much one states. if there was a lot of decision making that i had to do. the start to think about stuff that you might have to let go. these people -- they are human beings. it is brittle. abbott said that is the most brutal. perry >> this is in the midwest slot. >> south carolina was great. i said, let's go down to florida. >> the nights we lost denver or denver colorado, missouri.

we have another month of this? really? i did not feel like we were going to lose. i had fun in south carolina. mitt romney is the kind of candidate backing come back in florida and had a long ball and do great. the three-state lost that night meant we were going to be -- >> michigan was a really tough stretch, i thought it. losing michigan would not have been a positive experience. we went into it 10-down. a very extensive state. it was a state that had a lot of symbolic ghosts. it was really hand-to-hand it. we did not win by the landslide

that we wanted. >> it is april. the wrap up the nomination. i think there was a jobs report that was in the toilet in april 2012. suddenly, did it surprise you how fast mitt romney -- the party rallied around him so fast after all of that -- every week we were keeping ourselves away saying, let's see what happens with this county? >> no. we are such a partisan country, we never thought after this thing that the non romney primary electorates' were not going to galvanize. that is our theory all along. there is a narrow band that will decide this thing. it was never any doubt the party would consolidate quickly.

>> was the plan always he would announce a week or two -- if they wrapped it in march, you guys started in april? >> we knew where we were going to go. we knew exactly where we were going to go. we had a plan by the end of the year. we have contingency plans because our biggest moment was we were rich never going to end it after new hampshire. we wanted a longer primary. once we figured out they were going to go along. >> that was our good momentum. >> exactly. we spent a lot of time getting ready for that. we had a plan bill to run that for months in advance. >> may was the announcement. >> we were back from election day and we thought we had the resources in may. we wanted to hit all at once.

>> it has been my understanding that you understood the bennett mitt romney got the nomination that the super pac attack ads would start the next day. >> the big surprise to us as we thought that super pac ads would hit in january, february, march when we were unprepared to deal with them. to this day i and still confused as to why that did not happen. if i am running a super pac not affiliated with the republican candidate and i see what is happening on the republican side, i better provide some air cover because the president is getting a free pass right now. >> this is proof there was no coordination? were you always wondering where was the calvary and april? >> i think the whole impact of the super pac and the -- this is a fascinating subject.

like any new development like tanks or machine guns. what worked and did not work. i think what we discovered in our surprise and disappointment was there is some superb super pac from romney posies side it. the impact they had was not on voters. -- romney's side. you can analyze this and ask why this was. the most obvious answer, i think, is because it was not coordinated with the campaign. our ads always worked best when you coordinate it with a campaign and you roll it out with their press and with your call campaign apparatus and the

backs of the adds. they cannot do that because they were not coordinating with the campaign. it or not coordinating with each other that much. they were making different ads that were good as they stood a long. they were not directing what message. the obama campaign outspent us to-one in advertising. he looked at it on paper on the pro mitt romney side and the effectiveness was not what we would have thought. >> when you announced -- i remember being at your announcement and i was reading an interview with their running mate. i said to you, you guys announced -- i assumed you were not ruling out the president endorsing gay marriage. it was not the rollout plan for the first week of the campaign.

>> that was not the december -- >> that was not on the white to board a. >> talk about that. i looked to you and i said, it was the day before. joe biden had come out for gay marriage. i said, you know this will come out for a whole lot of news tomorrow. were you aware of how big that would be that week? >> yes. we were pretty clear what was about to happen. [laughter] week. >> so first week of the campaign and this is not the message you planned on kicking off with? >> yeah, it was -- it was challenging but it also is true that we all knew having talked to the president that he was going to take that step. so, yes, we would have taken it in a different -- >> you were going to do it

before the convention? >> yeah. >> you did not want a platform fight. >> he was ready to do it. either he was going to get a question or -- yes, the convention issue was coming up on us. there because lot of reasons for him to do it. we didn't plan on the vice president doing it first. [laughter] once he did, the truth is once he did it forced the issue. the truth of the matter is, we didn't know how the politics would all net out but the president, the way he handled it in the interview, how he spoke to it. jen, you can speak to it more than i. >> all of a sudden you had people -- this did increase supporters? >> absolutely. it frankly brought in the people that were part of the process even in 2008. it brought in new people and

frankly most people didn't know behind the scenes of the back and forth so this part did not affect our supporters. they thought this was something that they hoped the president would do and this made them want to get more engaged in the election. it was a boom for us. >> i put together a timeline to figure out how to have this conversation with you guys. everyone wants to say the debate is this and the convention is this. i think the month of june was the most important month of the campaign. on the obama side he does the immigration executive order on the dream act. then the supreme court decision on health care. it because big financial month for you guys. that's when you -- i want to go to sort of all three of those issues. let's start with the health care decision. were you guys planning for a

reversal? were you assuming it would be overturned? it seemed like to me you guys were caught off guard. >> no. >> no, i think we had -- >> we were caught off guard like everybody by the mechanism in which it was sustained. the robert's ruling. >> we have not contemplated that. >> there was ain't lot of pregame speculation. >> you were not gaming it out? >> we thought it would go. we had -- sort of a water cooler situation on what it would be -- discussion that it would be. >> how important was that

decision? >> we had our own water cool enan our own discussion. i think, you know, we contemplated what might happen. you couldn't escape the fact that this was a signature achievement of the president's first term. had it been reversed, i think it would have been negative affects on us. >> i never understood that the argument would be a positive for him if it was overturned. >> we didn't either. >> i think i was wrong that it would have been positive for him because the argument would have been it would taken out a lot of the energy on the republican base. to overturn obamacare -- to keep it in the electoral factory you

have to vote against obama. i think i was wrong. >> i would say two things. one, a win is a win. it was in a time where the president was getting beaten up. >> it is just our turn in the barrel. >> something positive happening was good. second, our vote always coorl lated with the view of people's affordable care act. after the ruling, the affordable care act's favorability went up. there was a lifting of the ceiling there which was very real. >> june turned out to be a bigger fund-raising month than you guys expected. is that fair to say? >> yeah. >> i heard versions of this. did you change how you would do july? did it change the timing on a

trip overseas? what did the june fund-raising boost free you up to do? >> one of the biggest challenging we had -- >> that was the first month you outraised obama. >> yeah. that was the first challenges we had and we had raised $87 million in $2,500 churnings. so a lot of the money we raised was victory money that we were using to grow the party and build out the infrastructure. we certainly, phased a financial disadvantage and -- every time i look at what didn't work out for us as a campaign or organization it is usually tied back to come bency. during this period, we were raising a lot of money but it

was not money we could immediately send out the door and put on tv. >> a very small percentage of it in fact. we would have these morning meetings and these numbers came in and there's this perception out there that we're raking in the money. our donors would called and say why are you not on tv, it was very frustrating to us. >> very few reporters would explain it. >> we could do these little numbers. >> look they raised $100 million. >> the only money we could spend on tv wfer the convention was primary dollars raised under the $2,500 limit. and that is how the system is currently structured. >> we need more of that money. >> in july, when you won a

primary to go and raise primary dollars. >> you did not have that other -- you had the luxury in your primary, david, where you had these clinton donors who never gave you money in 2008 and suddenly they could max out tow you for the first time. you didn't have that. >> the biggest difference is they had someone who was not going to -- they were not going to take federal financing versus mccain who was. so that gives them the ability to raise unlimited money and mccain was locked in. >> on the primary side, there was nobody that had a fund-raising list. there is knob that had new names for you. is that fair to say? >> there were some. le >> our theories were that, david, these guys made the decision of it is better to spend the money early than to

spent it late. during this period where we're facing this challenge we did a few things. our goal was to use the money that we were raising in big chunks and have the r.n.c. set up an independent expenditure that ran ads over the summer. that probably occurred -- they moved that timetable up earlier than they would have otherwise. >> you had more money. >> the other thing we had going on was super pacs. we believed, as david said earlier, at that moment there would be a lot of super pac activity. we needed the super pacs and the i.e. and also during this period, the governor signed off on a $20 million loan that allowed us to use primary money that we repaid back with general money through f.c.c. law.

we saw what was going on. we worked to try to compete with what they were doing, but clearly they had more resources at the time. >> if i can take one minute and larry you could chime in because you and jim were -- this was a thing we cooked up together. i think one of the most significant decisions we made was to bet on the front end of the campaign. i do believe and make we can have a discussion about it but in the month of october, ads made much less because there's so much coverage because the debates are so dominant. we had to define mitt romney before the conventions. it was better to -- larry's proposition to bet on a -- take money out of september and october and put it into may, june, and july.

the other thing that happened in june was when we ran ads on mitt romney. >> we moved $63 million from spring into the summer. >> the al gore tv budget for the entire tv campaign you moved in the account? >> david looked at him and said this is the right decision and we have to do this right now. jen was seeing that we were not where we needed to be with latinos and we dumped a large amount of money. we were, you know, we had to look at the president of the united states and say this is our best guess. >> jen, explain what the immigration -- i'm sticking to june, what the immigration

executive order meant? >> it was so important for us. we knew that if we were going to win in florida, colorado, nevada, we had to have unique programs based on the type of voters in those states. we also had a lot of young people that were excited about the dream act. young people were highlighting what they believed and why they wanted the administration to act. as much as we had so much going for us to communicate to latinos, the dream act was hard for us. having that executive order, really brought, not just the community to the front a little bit more but young people. it took them thinking good thoughts on the president to taking action and supporting the president. >> i'm only in july and i'm in trouble because i want people to ask you guys question.

i'm going to take a couple of more minutes on my questions then i want to mix in some of these students. you can start lining up on the microphone. when did you have your first meeting? >> april. >> with the governor. had you started before that? >> no. i had a list of candidates to get -- a big list -- >> take a look. >> do you like these guys? don't like these guys? i got some more. then he widdles it down from there. >> i know you're not going to tell us a lot about the process. >> go ahead. [laughter] >> what were some of the weird questions that maybe, a potential v.p. candidate had for you that surprised you? >> well, i tell you like weird moments were when i would meet with these guys and ask them

really personal questions. i think the dynamic was interesting. i'm a woman asking them, i can talk about paul ryan. i sat down with him and said, tell me about your dating life in washington, d.c. [laughter] it was a bit of an awkward moment but that was -- they originally gave me a room without a suite attached. i called down that we're not going to sit cross-legged on the bed and talk a this. so they gave me a -- an enormous suite which i found to be appropriate. [laughter] it was an interesting way to -- i didn't have to ask any really embarrassing questions. >> anyone that you met that you did -- >> some loose ends to tie up.

i was aware that mitt had said he didn't want anyone to have an issue that was a distraction. so, you know, some of the things that we asked them about the perm questions or -- personal questions or in the public domain that needed to be followed up on i did that in person. >> stewart or matt, how many people came to you and say could you please put me on the list? like, would you have republicans going i just -- i don't want to be vetted but i would love to be floated please. how does that happen? >> people call in and say -- i'm not much of a small talker so i don't get it as much as other people. >> donors all had opinions, right? >> yeah, they all had opinions.

the whole v.p. selection process was excellently run by beth and a close process in the campaign, unless the governor brought you into deliberations and he did do that from time to time. but i was amazed at the fact there wasn't a lot of leaking. i think the individuals who did go through that process respected the confidence in which their discussions of the campaign were held. and i think we ended up with the a great result. with the selection of paul ryan people thought we shot ourselves in the foot because we took the issue of entitlement reform, specifically medicare and the congressman's plans to transform the medicare system and put that at the top of the campaign. but we actually ended up winning seniors and we won seniors in

florida. one of the positive legacies of the romney campaign is we showed republicans can take on these tough issues and win. >> you guys -- none of you thought it would be ryan, right? you went public about another candidate, right? >> that was portman because i looked at ohio. >> i had the ryan thing pegged. [laughter] >> i didn't actually care. [laughter] >> what would have made a difference in ohio? would he make a difference in iowa? were there some people that popped more than others? >> sure. you can say that ryan was one of those people. the reality is ryan helped us in wisconsin. wisconsin was a place -- i think it was five elections before november. they had a recall. they were just tired. they were tired of volunteering,

they were tired of elections so what happened to us is when ryan was picked it engaged our voters. they got a second wind and they were going to do more. the impact was less than people anticipated. >> let's go to a question. don't make a speech. that's all i ask. no political speeches just ask a question. >> thank you all for having this event. my question is geared towards the romney camp. following the first presidential debate between the two candidates. there was a point that carried over where the momentum changed, at least in the media. i know that jim, following the election, there was a point where you talked about the accuracy of your polling numbers. does those numbers reflect in the same thing because there was a change on how romney was

carrying himself and being depicted in the media. >> thank you for bringing up the denver debate. [laughter] >> i was going to get there. i was going to get there. it changed the structure of the race. and we saw that in our polling. people who may have closed their mind to governor romney suddenly reopened it. and it made for a much better october than september. because in september, we were dealing with the fallout from the 47% video. so the denver debate was a real quick pivot for us. and we did experience a lift in the polling. we saw it in the state and nationally. we were receiving more donations. we re-energized republicans whose interest in the interest

was flagging a little bit because of the 47% video. so all in all, that was one of the high points of the campaign. >> jim, did you see the hit in the polls and when did you stop falling in the polls? >> we saw in our internal numbers was they got back what they lost from the 47%. literally went like this, this, and came right back to where it was. but we never went behind. we never went down less than -- never -- our lead never shrunk less than 2 1/2 points. we were pretty sure that we were ok the entire time. >> did you see an energy issue issue? >> we did. it was tough for our folks and so excited about the debate, they felt let down. they felt in part they were out there working so hard every single day and maybe they were concerned about how the president did in relationship to their hard work. so it was definitely tough. and rebounded quickly. but it took us some time to communicate. >> so correct me if i'm wrong about this, one of the

unintended or unexpected things about this, we were a little complacent i think in september. september went better than we ever imagined. >> we or was the president complacent? there was this assumption that he was complacent. >> i don't think he was complacent. but i do think it's natural, you know, to feel like -- look, all i got to do is tie in this debate. because we're in a good position. i just have to do well enough. and you never want to go into a debate with that attitude. mitt romney knew that his back was against the wall. he had to perform in that debate. had he not performed in that debate, the election was over. he had -- the conventions fell in our favor. the 47% tape was very, very tough. a lot of independents who leaned republican had gone away from him. and he had to perform in that debate. and the reverse was -- i don't think we were in quite the same position. but the second debate was the

reverse. we had to perform. we knew we couldn't have a second bad debate. but what i was going to say is i think there was actually -- there was some increase in volunteerism after the debate. because people began to worry that maybe this thing was -- was actually at risk. >> matt, talk about this polling thing. i know this has been -- it's among the great sort of -- what -- what were -- do you believe you were seeing different numbers than the obama campaign? >> well, i think there's this -- i don't even know if it's a debate anymore but there's a belief that many republican pollsters across the country were just using a model that at the end of the day just wasn't -- >> an out of date model? >> wasn't accurate for this election. so, you know, there was clearly coming out of that first debate, whether the numbers shift was as great as eric said or as what jim says it was equal to, it just did transform the race.

and i think the day before that debate, i don't think anyone thought it was ever going to be close again. and after that debate, i think that there was a perception because the campaign and governor romney did perform well coming out of that debate. and i think that we had a good period of time in between the first and second debate where people thought -- >> the longest gap between two debates in the modern era. >> it felt like -- >> time flew for us. we were having so much fun. >> it was extra long for us. >> polling, polling is not a betting mechanism in campaigns. it's used to direct campaigns and it's something that is sort of people forget. it's not to cover the spread. it's to guide you in the campaign. and if you look at the -- point one. point two, the nbc wall street poll, in the campaign, there

was seven voters different in that poll. not seven points but seven voters out of a sample of i think 1,800 votes. that's a pretty close race. when you have seven voters' difference. we were behind those seven votes. but a lot of interesting polling, studies that can be done, and analogies. but i think that neil did a fantastic job guiding us in this campaign. >> our pollster, neil newhouse, very depressing often talking to him. >> we wouldn't have gotten the nomination without neil. and the input they'd into our decision making. >> monday night knew how -- two principal campaign pollsters and john harwood will be moderating that discussion and we'll have a full discussion on that. >> let's go. the next question.

>> hi there. the subject of the independent candidates came up briefly. and i was wondering if there was any point where either team was worried about the possible impact of gary johnson or ron paul making a serious market on the election and whether you took any action to mitigate that possibility. >> i'm going to reask your question and there was a point in the fall of 2011, jim mensah, where you and i would have conversations -- i was convinced there was going to be a serious third party candidate of this americans elect. you were convinced of it. that it was a potential threat. why were you convinced it was a threat? >> if you look at 1992 and the incumbent president, you just don't know who they're going to take votes from. and at the time as david said earlier, we were going through a brutal time after the debt limit. and this was not a good time for us. and we looked at who those potential candidates could be. and some of them could drop on us. on the gary johnson thing, we did look closely at that. and jen and i had discussions about his pro-marijuana

positions and what that did to us in colorado. >> you thought that could hurt you and take votes away from you guys. >> there was a theory that it could take young students. >> a marijuana ballot initiative in colorado. >> larry, you can speak to this, that no matter who we looked at at the end of the day, we didn't lose out. because people were -- people didn't want to be for us, but didn't want to be for someone, they would default there. so they already had made a judgment about us. and so we ultimately concluded that an independent wouldn't hurt us. >> your floor was in the 40's. >> we had obama -- >> bush in 1992 had lower floors. >> there were obama voters and people open to an alternative. >> obama was over 40. >> and where we put a third person in there, it would split up those people looking for an alternative. >> did you ever run bloomberg? >> we did. >> yeah, we did. >> matt, did you ever think there was going to be that --

forget gary johnson or ron paul but that moderate, somebody that was going to split, the country is polarized and the bloomberg type or whatever? >> i don't think i ever really thought about that seriously. but to the questioner's questions, dr. paul, dr. paul is someone that we took serious from the beginning of our primary right up to the day of our convention when mitt was nominated. and we were fortunate, dr. paul and his supporters are anybody that underestimates them dot-does it at their own -- them does it at their own peril. we were fortunate the governor m h developed a -- the governor had developed a relationship. >> and also between the spouses. >> and between the spouses. they had debated between the 2008 primary and 2012 primary and they had debated 37 times together. >> wow. >> they had grown i don't want to speak for them but the

governor thought dr. paul was a nice man. we always took dr. paul seriously in the primary. and we were very happy that he stayed and -- >> do you think without that personal relationship that he might have been more tempted? >> i don't know. i don't know. but i think it's important in life to treat people with respect. because it pays off in the end. >> let's go to the next question. >> thank you. i would like to get the take from both sides. in hindsight, is there anything campaign strategy wise, including super pac's and v.p. picks, that might have changed the outcome of the campaign or if there are other factors, noncampaign strategy relating to including demographics in the primary process and slowly recovering economy that were too great for any campaign camp to reverse the outcome of the campaign? and if the latter, which factor was more crucial? thank you. >> give the one moment. what -- one thing you would love to change and rerun the campaign. stuart. >> me?

i like questions like that. [laughter] >> i love it. >> a really good question. i've had a lot of sleepless nights thinking about that. so can we just skip that? [laughter] look, i don't think a campaign turns on one moment. i can -- on one hand you can say -- i don't know any campaign that was outspent 2-1 on television as we were where an incumbent has lost to a challenger. without some sort of scandal. if we could have won the primary earlier, i think it would have greatly advantaged us. >> if you could have -- if you could war game it that way. >> we were close to winning the primary earlier.

though history will show that that's very difficult to do for a candidate to do. other than that, i think i'll just take that. >> eric, the one -- what would you like to war game? >> well, look, i think you got to give the obama campaign a good deal of credit for increasing the turnout of women voters and young people, hispanic voters. even african-american voters. i didn't think you would be able to surpass what obama was able to accomplish with the african-american electorate in 2008. but they did. especially in ohio. and i think that accounted for their victory there. but ultimately, i think the reason that obama won is the economy got better. this was the central reason for the rationale for the romney campaign. and when mitt announced in june of 2011 the unemployment rate

was 10%. in the last month of the campaign it was 7.8%. so their trend lines were going in the right direction and as the economy showed improvement, obama's numbers got better. >> that's no fun. that's the academic answer. david, what's the one thing you would not want to have changed? like what's that one moment? is it the supreme court ruling? what is something you had -- what is something that happened in your favor that you feared, if that -- if that had flipped, taken the same question in reverse, what's the one thing you wouldn't want to go through this campaign without? >> let me say, i think eric's answer may have been an academic one but i don't think it was an inconsequential. if those jobs numbers had continued to churn along there at -- our great fear was that there would be a reversal and that the numbers would start going backward. and i think that would have put us -- >> like last month. >> that would have put us --

>> quit keeping track. >> put us in uncharted -- >> i can't count one month. >> in uncharted waters. so that was -- that was a concern. but the -- stuart said they got outspent 2-1. and technically that's true. and he made the point that he doesn't believe that the superpack spending was -- super p.a.c. spending was helpful but it was immense. there's value to incumbentcy and no question about it. we looked at the president's campaign in 2004. he was in a difficult situation that was similar to ours. he worked very hard to turn it into a choice and make sure there wasn't a referendum election. we did the same thing. and we had the advantage of being able to plan and do our work over a long period of time while these guys were mired in a primary. and that was enormously advantageous. >> so you really go to that stuart question. that could have been the difference. >> that's true from a timing

standpoint. and also, they paid us terribly high price for that nomination. i'm not criticizing because you can't be the president unless you get nominated. but this -- this was a difficult environment for those republican primaries and those debates were brutal. and in order to get through those, governor romney took some positions and used some language that probably if he had no primaries, he would not have done. and that made it very hard. that -- that set up a difficult general election. >> any moment you would like to war game -- war game it differently? >> instead of a moment and david touched on it is i would like to have had about 10 fewer primary debates. they sapped the energy and they -- >> took time away. >> totally. >> larry. what's something you couldn't have done without? tactically? >> i think it's certainly been

said, i think that the nominating process that romney had to go through was the great asset for us. one of the things that wasn't mentioned about our early tv bye, in addition to everybody focuses on the bain stuff but in addition to that, we had the earliest and longest hispanic media buy of any campaign in presidential history. second, we also started a women's track of television at that time that went continuously through to the end. and both of those tracks really were -- a little less so on the latino thing and we ultimately came around to talking about governor romney. but certainly in the women's track, really focused on statements that he made in the nominating process that were hard for him to sustain. >> did you see this happening and could you -- >> yeah. >> let me go to another question. >> thank you all for coming. my questions for both campaigns but from the perspective of the romney campaign, on election day the reports about the favorable turnouts in certain

suburban counties, colorado, central florida, virginia, that indicated romney had some strong turnout, but those reports turned out to be erroneous. so i wondered if you can speak about what the communication is like on election day and how do you change your policies and your -- the way you function in order to maybe maneuver and get some voters out? >> if could you let me know when election day starts. and by the way, did you know we're still counting votes in some places? matt, you want to take that? >> i think that the republican party needs to and chairman preebus -- priebus, the chairman of the republican party, need to catch up on the voter turnout side. and again, this is another example, and i hate going back to it. but it is true. and i'm not trying to use it as an excuse or a crutch. but the power of incumbency, they had five years to work on

their voter turnout plan. and our party really needs to focus on investing the resources as soon as possible and figure out the brightest, best new tools that we can use on the political side to not only catch up but to potentially exceed. so whoever gets the nomination in 2016 has a party apparatus behind him that's as good as an incumbent. or as close as possible. i don't remember specifically election -- specifically. election day is a blur. i don't mean to answer your question on that. but i don't remember what you're talking about. >> jane, you were counting these votes, vote by vote, when did you know -- when did you know you were going to hit all your targets? maybe you weren't ready to say that the president was going to win re-election but when did you know, all the numbers we said we have to hit we're going to hit? >> i was pretty confident.

and i was probably more confident than jim. but because we felt like our plan was pretty solid and our numbers were bearing out. but our election day started in september. and in iowa, early, where we had early votes. and we didn't do as much in early voting in 2008 as we did in 2012. we stopped worrying about polling. because we were counting votes. and every single day, we would look at exactly who was voting in these states that had early vote and we -- we were able to say, look, we're not hypothesizing, these are the people we modeled and we felt those numbers were matching the numbers we expected to see. and that our planning was in place for what we needed. >> was it rhetoric when you guys would say, oh, they're just moving votes, did you really believe that? when they -- the early vote, when they would talk about the early vote numbers, and you guys -- and just the same vote as election day, was that

campaign spin? or did you guys -- >> in the fog of war you don't really know what's happening because you don't know what's going to happen on election day. i mean, look, we haven't talked about the impact of hurricane sandy here. >> no, we haven't. >> sthri was a force that was negative for -- i think was a force that was negative for the romney campaign in the sense that it was about -- what is the first thing you learn in campaigns, it's about agenda control and we lost control of the agenda. so look, every campaign needs to seem confident. in a world in which nbc, "wall street journal" poll again shows you seven votes' difference, we had reason to be confident. it was not specious for us to be confident. and there are predictive qualities of people following those who are confident. and one of the most interesting -- nate silver spoke, i think the most interesting part of it

is the predictive qualities of people following those who are confident. and so -- >> still the election is over because stuart is quoting nate silver now. [laughter] >> i'm not sure i read all -- i read all nate's stuff and his books are interesting. and this idea that we were overconfident has been overplayed. but the history of people flocking to the barricades to follow campaigns that say, hey, we have a shot, is not particularly great. it tends to be -- >> motivate people by saying, hey, we -- >> we could win. >> let's go, it looks like we're going tok with the last question here and then -- to go with the last question here and then wrap up. >> my question is to what extent you think social issues shifted attention away from the conversation about the economy that mitt romney really wanted to have? >> matt, you and i were talking about how quickly you guys tried to stop todd aiken when

that popped and that you did it before -- there was some conservatives who were upset that you guys came down so hard. had you seen something? >> our goal all along from day one was to try to keep the debate and the campaign in mitt's wheel house and mitt's wheel house was jobs and the economy. with the sprinkle of spending. and we tried our best to keep it focused on those issues because that's where we thought it played to mitt's strength. so any time there was a moment, whether it was related to almost any kind of issue, we always tried the best that we could to get it back to the economy and defuse the situation. sometimes we were successful in defusing the situation. sometimes we were not. but it was always our goal to try to do that. >> all right. let me -- i want to wrap this way. i've heard, i think, i know

from the romney side, what's the one thing you would change about this process is fewer debates. so i didn't hear that. if i'm going to be at nbc we're going to plan a whole bunch of debates and our first one is coming up in a couple of weeks. just kidding. [laughter] we didn't talk about the conventions and i want to ask it this way on the conventions. we can -- there's all sorts of ways -- talk about the substance about what you guys did at your convention. are they now too late and in four years from now, will the conventions, will they be earlier, should they be earlier and will they be shorter and should they be shorter and i want everyone to chime in on this. >> look, i think they are too late. we shrank our convention and decided to make it three days. and silly to be four. i think people will continue to look at that. you guys have less appetite to cover a lot of it. i think the whole convention system needs to be looked at. and i know the chairs of both committees are doing that. and i think that's very good. the other thing, you didn't ask us but i'm going to say it anyway, in the united states of america people should not wait

six hours in line to vote. and that's the other thing the two parties got to come together and figure out how to run elections where people can actually vote. >> stuart. >> the only reason the conventions are late now is because people figured out the federal funding system that you got the same amount of money to spend if you got that -- >> federal funding is moot. >> in july. so i think that people -- two points that are related. i think that the conventions should move earlier if we don't have federal funding. but i hope and pray that we can go to a system that has some federal funding and the system we have now is -- everything minus the corruption that we hated about the watergate system and we need some sort of reform in campaign finance that we have now. ultimately, history will show this tends to favor republicans. we take these limits off we tend to do better. but i think that these billion dollar campaigns which will be $2 billion campaigns are abomination.

and that we saw it now when you had people campaigning in -- heavy fundraising schedules in september and instead of meeting with voters is not how the system should work. >> unbelieveable how many fundraisers both sides did in september. it was -- and where will conventions be in four years? >> there's two things that a convention does. the first is it's the official nominating moment. and that's where these guys got wrapped up in the finance problem that they've been discussing. they weren't the nominee until the convention. and the second thing it does which is really different, but it's kind of the bigger thing for the electorate is it's a moment where people pay attention and focus and there's a chance to get across in a very significant way who you are. if you remember, the gore convention was a big moment. the clinton convention was an extraordinarily big moment. and so i think you can decouple those things. and get that kind of technical nominating thing back to the end of the primaries so it lets

that process start. i kind of like the timing in terms of that -- the big moment for -- yeah. when you talk about what's the rhythm of a presidential campaign, you got the vice-presidential nomination. you got the conventions. and you got the debates. and i think to kind of have that big moment in the fall, when people pay attention, makes a lot more sense than to do it in june when people just aren't ready for that. >> i think there's an awkward part in the campaign between the primary ending and the convention. and i think -- i think it's almost -- unless the federal funding thing changes, it's inevitable that they'll go early. because -- and i think that's a good thing. i hear -- >> you want to shrink that process. >> i want to shrink the awkward period between the primary ending and the nomination starting. and i think kicking it off in the beginning of the summer and getting voters refocused so that the general election isn't

two months, the general election is four months is a good thing. >> jen. >> i think about how we use the convention. we tried to make it more than just about the people that were in the room. it was about grassroots organizing and pegging it to the convention. it was about what state we put it in. competitive state where we had a ton of voter registration. and so from that perspective, i think for them to be successful for our parties, we have to build it bigger than just that room and those days for other people to feel engaged. and i think i agree from an organizing side, with larry, that if you have tellerer, for the purpose of organizing across the country, it's a lot harder to do in early summer when people aren't just engaged as you need them to be. >> no, no, i agree with these guys. and we actually got a lot out of our convention. >> more than you ever thought? >> more than we ever thought. it came up very, very well. these guys had to deal with the same lingering problems that they had throughout from their nominating process and different forces within their convention. they also had nature problems.

because they had a four-day convention that became a three-day convention. >> i'm not a meteorologist but i can tell you that florida and north carolina guys are both in hurricane alley. and both of your parties i couldn't believe when you guys both -- it was inevitable that one of them was going to get dinged by a hurricane. unbelievable. >> let me say this before we wrap up. two things. one is because it's a bugaboo of mine, and i would be remiss if i don't say it to -- for a second. i hope that we find a way to free ourselves from the tyranny of public polling which dominated the coverage of this campaign in a way that it hasn't been before. some two kids in keokuk and the poll is the a.p. story of the day. it is a very, very destructive thing. >> robo polling in general is what does it. >> the other thing before you go on to eric is i want to repeat where i started before these guys came out.

which is i'm proud to sit on this platform with these guys. it's been a pleasure to be with them in these post-election discussions. and it reminds me about the fact that we may have different views. but we share a great passion for the process and the country. and so i would be remiss, especially since i dragged them all out here, if i didn't -- >> fun to watch these guys. it's like at this point, they're all cut from the same cloth. they just have two sets of ideologies but very interesting to watch them go. eric, where are you on the convention? >> i love the pageantry of conventions. i regret that post-9-11 they have the feel of east berlin. and a lot of barbed wire and concrete barriers. >> you can't go around and see people anymore. >> and of course there is no better platform for introducing a candidate and the principles of the party and in this case we used the convention as an opportunity to talk about the personal side of mitt romney which people -- and was missing

from the campaign. so if you wanted to make a big splash from that, the convention is the perfect place to do that. >> matt, what are you going to tell mike priebus when he picks a window? he's going to go first. he picks first. so obviously democrats will go last. that's the way -- since an incumbent party. are you going to tell them to go early? >> i am still very optimistic that conventions are important and i agree with a lot of what he talks about on using them as a tool to get your activists enganged and -- engaged and an opportunity to take over tv for two or three nights. i certainly believe that they should be shorter in the new world that we live in where people aren't accepting matching funds. but i'm pretty optimistic that -- >> how about earlier? >> yeah, i think they need to be earlier. but i'm still pretty optimistic that they're going to have a big impact on -- for many, many years and be a big part of the presidential campaign process. i think there's a lot of people right now that are kind of dumping on conventions and will they ever even exist?

they will be one day. and i think they're an important part of the process. and i'm kst chairman prib. -- confident chairman pribus will do the right thing. thank you for everybody being here. thank you. great audience. [applause] and i apologize for everything i didn't get to. i know there's a ton we didn't get to. and i apologize for that. >> we got five weeks to talk about it so come back. >> thanks again.

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>> the question of control is the one that gets people most exercise. how do you ensure -- how does any company that participates in the space, this industry, guarantee that remains the case and provides users with enough confidence that the information they share is not being abused? >> the second part is all about transparency. what searches do you have and how are they being used? that is something that is really

important. there will be industry standards in terms of providing users an account statement. some of these primary platforms, what they show you it is what data you have stored there. one of the key pieces that also provides user choice is making sure the data is portable. it allows your barrier to switching carriers to be lower. one of the analogies i use, the papers you wrote in college, are they yours? absolutely. >> i feel that they are. nobody else is interested in them. >> but nothing else you have done over the past 10 years is not nearly as coherent and structured, but just as

insightful in terms as they were your words expressed your way. and it tells a lot about what you learned. i do believe fundamentally they are yours. if you can take that history and pick it up and move to a different search provider and take that as an interest graph and use it in a different application, that should fundamentally belong to you. you are allowing the service to access it to get better information and better results. either they deliver on that promise or you take your data and go elsewhere. >> well, that raises an interesting question. should you be able to take all of that data? it sounds to me that it could be a great deal to move into one platform or another. is that possible? i can see a platform being resistant to that. >> it is technologically possible. a lot of the players are providing for something like that. it is not something that is generally something that people think about doing every day. but it is an option. i think it is an important one.

it can give users a lot of confidence in terms of how things are handled. >> and described how one of your employees asked how yahoo! is going to compete if it doesn't have one of these four key distribution technologies. there is the mobile operating system, hardware, the brother, and social. i do not know that we got an answer. >> one of our employees as that. given that we do not have mobile hardware or a social network, how are we going to compete? >> it is a question for every company that seeks to compete with those others that have those technologies. >> of the four horsemen of the internet, almost all of them are playing in one, if not several, of those mediums. i think the big piece here is that it really allows us to partner. yahoo! has been a friendly

company. it ultimately means there is an opportunity for strong partnerships. that is what we will be focused on. we work with apple and google in terms of the operating system. we have a strong partnership with facebook. we're able to work with some of these players in order to bolster our user experiences. >> is that diecast? you talk about this new graph, the interest graph. is that the kind of technology that will become key to distribution? >> with the web becoming so vast, there is so much context and so much social context, and now there is so much location context, how do you pull all that together? your personalization comes in to make sense of the content.

it is the internet ordered for you. it brings yahoo! back to its roots. you cannot just categorize anymore. a feed of information that is ordered for you. it is also available on your mobile phone. >> some of those technologies remain -- there is competition in the browser world, in the mobile hardware world, and in the operating system world. what about social? >> facebook provides an amazing platform. now what happens with social is what you do with it. it will be the predominant platform. what happens in social is what you do with it. it is taking that and finding useful context. you are in davos right now, do

you know who else is? and be able to offer me the opportunity to meet up with someone who i did not know would be here. >> there is a natural conflict in the world of technology between innovation and execution. we have seen many companies struggling with this. can both be done well at the same time? >> it was pointed out to me a few years ago. one hypothesis is what is the opposite of innovation? a lot of people would say the status quo. there is another school of thought that says the opposite of innovation is execution. if you have to be in execution mode, it is hard to find a space to innovate. for us, there is a great period of execution.

can we take these products and revitalize them for the web and make the transition to mobile? will there be room to innovate? to say this is how yahoo! groups worked on the web, but now there are these new opportunities. can we spot some of those innovative ideas? >> is size a barrier to innovation? >> i do not think so. you can innovate at scale and with large size. if you have 10 engineers and you are going to grow that to be 20 or 30, do you want to do the same set of things two or three times better, or do you want to be doing two to three times the things? interestingly because of execution, because there's so much the opposite, if you wanted

to execute perfectly, get the design exactly right, work through the details, you would invest two to three times as many people per project. if you want to find those new ideas, it wants to take those same people and put them on something that is far flung that you have never thought about. it really is this tension. you can innovate at scale but you need to save room to have small teams working on those ideas. >> share with us your experience over the past few months. >> you arrived to an innovative company, but perhaps there was too much going on. what have you focused on? what are you most excited about? particularly the ones you have the most control over. >> i was genuinely pleased. i knew there had to be great people at yahoo!. the same way that when you look at art, you can tell if it was created by a nice person or not.

or a depressed person or not. you can tell with yahoo! products that there are really nice, smart people there that have a great time. it is a great company overall that has a very fun culture. my first few months, my focus -- technology companies live and die by talent. we talk about the talent wars. it is not that people in talent wars are not competitive with each other, it is just that when you start to see the best people migrating from one company to the next, it means the next wave is starting. i believe that really strong companies all have very strong cultures. yahoo! is no exception. they have been a strong company for a long time.

they have a strong culture. they are different from every other corporate culture. i want to find a way to amplify it. amplifying it is how you find the energy, and energy is what you can harness. if we have people and they are excited about what they're working on every day and they realize the next big hurdle is mobile, you can take that energy around the culture and find fun ways to apply it that can be really impactful. >> what are some of the things you found that we will see over the next few months? >> i do not like to talk about things before we do them. i do think a lot of the keys is what i have already talked about. there is a real opportunity to help guide people's daily habits in terms of the content they read. that is something we're really working on.

all these daily habits, these -- news, sports, games, answers, groups -- these are the types of things where we have been underinvested in them. a little love will go a long way. yahoo! groups has not been refreshed in 11 years. it will go a long way if we start to modernize some of these products. >> when people get excited about technology, they forget about the role of design. going back to some of those routes and saying, now that social allows everyone to be a publisher and for you to be able to find interesting question to answer, topics where you are a domain expert, and write about them, and for friends who know

you, can come by your answer, i think there is powerful that we can unleash there in terms of the content for end-users and its utility. >> whether it is the big companies or start-ups, what other start-ups excite you? >> there are so many things. this is a question like to ask people. the one answer you never want to give is, i am very discerning, there is nothing that good. there are so many amazing thing that you get to see all the time. all kinds of amazing technologies on mobile. when you think about what it means to be location sensitive. something i've spent a fair amount of time thinking about.

all kinds of terrific technology is there. some of these are very basic in terms of being able to check-in. if you know where people are and where they check in, there are all sorts of sophisticated thing that you could go on to do. there are amazing technologies like that. he in bridging out from the mobile technologies and desktop technologies, those are terrific things happening. in the world of biotech, being able to do dna analysis, analyzing and helping infertile couples doing a better job conceiving children there is a great company i know of. there is an amazing company working on wireless power. can you have an automated energy machine? they actually think you can send energy use in waves.

the thing about that, in terms of us running around and putting things in, you just need to get close enough to the router to pick up on the power. what that could do to the world of advertising. the signs of bus stops light up from behind, they have wireless power behind it. you could be at the bus stop and charging what you use your device. they're all kinds of exciting things that people work on every day. >> when people get excited about technology, they often forget about design. apple changed the way that many of us interact with technology. interact with the internet itself. that may be that form can be as important as function. how much you think about that? how important is it to what you are doing? >> i think about design a lot. apple is the gold standard. in that, apple's philosophy is that the design and technology itself should fall away. i think that is really true. i think in a lot of these interactions, technologies become very powerful when they do just fall away.

the fact you can switch from things is amazing. the fact kids are using tablets. parents will upload videos, showing before they even talk, they know how to turn the page on the ipad. they can have it within videos. they cannot even express what they like that part, but they know how to get their. what is powerful about that, it uses the national paradigms' that people already have embedded in their minds, innate to us. it allows us to use technology. that is incredibly powerful. that's overall what you want to have happen, to be able to whittle away the technology so that all the complication lies underneath.

there is that thin layer that you interact with. one of the reasons why voice recognition has taken off to the degree that is has and why siri is something that is so interesting for people. you can just say what you are thinking and transcribe an e- mail or a text or a search. now there is this whole set of technology and supercomputers that with your voice, you canyou can have it do what you want them to do. >> is that to say that a level of curation, something akin to a wall garden, may be necessary? >> i think there is a clear tension there. i do think that the application systems that exist in i.o.s. and in apple is very curated,

but absolutely beautiful. i do not think it is such a bad thing because it has raised users' expectations for design. people used to not think about design or appreciate it that much. when you see something that is beautiful, it does create a lot of respect. i think that is one of the reasons why apple has garnered so much praise for its design is that it made sure that, for example, the entire ecosystem of politics on that platform work >> in a few moments secretary of state john kerry talks about foreign policy in a speech at the university of virginia. >> several live offense today to tell you about. the georgetown university loss

attempt host a form on federal, state, and local energy policies. also, the indian foreign ministers at the carnegie endowment for international peace discuss us-india relations. also, how sequestration will affect federal workers. 2:30 p.m. eastern. [no audio >> the principal neighbor -- naval strategy of the south is commerce rating. if you are going after merchant ships, one is all you need. if you caught a merchant ship, come alongside and put a prized crew on board. take it to a port where a judge

could adjudicate it. sell it at auction. you got to keep the money. because it depends on the profit motive, the shipowner paid men and the ship itself. he expects a return on his money. the crew expected prize money. without friendly ports where they could be condemned and sold, you cannot make a profit .n confederate profiteering died out. maritime entrepreneurs found out they could make more money blockade running. >> historian craig symonds looks at the civil war at sea. defense department officials outlined plans to furlough

civilian employees if automatic spending cuts go into effect the first of next month. this is 40 minutes. >> good afternoon. thank you for coming. thank you for your interest in this topic today. with us today we have our undersecretary, bob hale, and acting undersecretary, just and

-- jessica wright. they do have some comments that they would like to start with, [inaudible] furloughs. then they will be available to take your questions. >> ok, good afternoon. today the department of defense faces some enormous budgetary uncertainty unparalleled in my experience. the possibility for sequestration on march 1. it could mean 9% across all accounts except military personnel, including wartime accounts. we will protect those accounts, but that means larger cuts to the base budget. the continuing resolution, if it stays in effect, has the money in the wrong places, too many dollars in the investment accounts and too few in operation in nantes. the pattern here, there will be

pressure on base budget operation and maintenance affecting continuing resolutions. finally, we are spending at a higher than expected rate in our oko budgets. two years ago we did not anticipate and tell operating tempo. we will meet those costs, the sum of all those effects means we are seriously short on operation and maintenance funds. this will have serious adverse effects on readiness. we have taken short-term actions to slow spending and avoid more draconian cuts later. affecting many of our organizations already, sharp cutbacks in facilities maintenance, cutbacks, with sequestration lasting all year.

they will have to have much more far reaching changes. there will be cutbacks and delays in virtually every department. it will mean cutbacks in unit buys, increases in unit costs. we will have to cut back training, particularly for non- deployed units, leading to actions such as two-thirds of the combat brigades being at unacceptable levels of readiness by the end of the year, including those already deployed in afghanistan. most airports units would be below acceptable levels. we have decided to take one fewer carrier in the gulf. unfortunately along this list of items, with sequestration if it lasts all year, referred for civilian personnel.

we feel we have no choice but to impose, the we would prefer not to do it. we are more than 20% short with seven months ago in the army. making up a substantial part of funding. reductions in support cost us money. firms are really the only way that we have to quickly cut civilian personnel funding. we have established a general approach that we will follow. it is one of the approaches of last resort. we will also insist on consistency across the department so that all of our organizations will do so. about the same for the same number of days.

there will be some limited exceptions to this, for example. we will not furlough citizens in, but zones or citizens required to make safety of life or property. 20 policeman on a base, they are not all automatically exempted from furloughs. they have to exempt some or all of them. exempting employees paid with non-appropriated funds, we will exempt hour for a national employees. how would they work in general? first, there is a whole series of notifications. the first one was started today. it starts a 45 day clock ticking. until that clock has run out, we cannot proceed with furloughs. we will ask components to identify specifics inspections.

they will begin required engagements with local unions. they will notify unions with national bargaining rights. at some point in mid march we will send a notification to furlough before we can take any action. later on in april we will send a decision to employees. they have a one week time period to appeal the protection board. the bottom line is that furloughs would not start until late april. -- late april. we certainly hope that if triggered, that in the interim congress would act to not trigger the sequestration.

or take some short-term action while they are dealing with the broader issue. meanwhile, unfortunately we will have to continue our planning for furloughs. this is one of the most distasteful taxed -- tasks i have faced in my four years. we will work it out. >> thank you, bob. let me first say that our focus is clearly on people. civilians around the world provide invaluable support for national security. everyday they make countless contributions and sacrifices in support of national defence. the effects of sequestration and the continuing resolution will be devastating. on our civilians, it will be catastrophic. these critical members of our workforce maintain and repair tanks, aircraft, ships.

they teach our kids and care for our children. they provide medical treatments to all of our beneficiaries. they take care of our wounded warriors. they provide services in programs like sexual assault prevention and suicide prevention, just to name a few. let me be clear, the first, second, and third order on sequestration will be fell in local command and local communities all over the united states. this is not a beltway phenomenon. more than 80% of our civilians work outside the washington, d.c. metro area. if furloughs are enacted, civilians works -- will experience a decrease in pay. as a result, many families will be forced to make difficult decisions on where their financial obligations live.

key benefits like life insurance benefits, health care, and retirement will generally continue. those programs and policies are mandated by the office of personnel management and applied consistently to all government employees. loss of pay will only be felt by each employee, but it will be felt in the business communities where they serve, where their kids go to school and where their name -- and the neighborhoods they live in. the department will apply these of furloughs if necessary in a consistent and equitable fashion. with only a few exceptions. civilians will experience the impact directly to their wallet.

service members, retirees, families, they will clearly feel the effect of these actions. if sequestration is not averted, associated furloughs will affect war fighters, veterans, and family members in on told ways. let me talk about a couple of those ways. our goal is to preserve the accreditation of our schools. as we continue to work with the department of defense education activity and how they will implement a furloughs, we are committed in mitigating the impact of sequestration on the school year for our kids. regarding health care, about 40% of our medical providers are civilians.

this furlough will affect them greatly. our goal is to mitigate the impact and provide quality care. certainly family members will feel the impact of sequestration. our intent is to ease the impact, but it is clearly possible that operating will be curtailed. while it is our intent to preserve family programs to the greatest extent possible, some programs may be affected if the length of sequestration goes long and hard. we understand that sequestration will be significant.

not only to our civilian employees, but to the servicemen and women and their families. it will affect local communities and local businesses. it will affect our dedicated men and women who have lived in the local communities throughout our nation and clearly overseas. we know this. that is why our guiding principle will be to lessen the impact for every man. we are clearly grateful for the support and clearly grateful for the support of the men and women of our civilian force that worked to help the war fighter protection mission. thank you. >> you mentioned that every state would be affected. which ones have been affected the most?

>> we have not done that research, to find out which state will be affected the most. clearly where we have the large affected>> you may not be bases and depots, they will be affected>> you may not be surprised, as justice said. >> [inaudible] >> maybe both. i was talking about furloughs specifically. >> is that available? >> we can get to that. >> what do you -- >> [inaudible] cbo and center for strategic budgetary assessment take the defense department back to 2007 roles. why can the department of sort the kind of cut?

what is wrong with that picture? >> first of all, there is a timing issue. it will occur five months into the year. particularly in the operating side. we will have to take it within seven months and, without, frankly, time to get ready. more generally i would say that i am always troubled if we're trying to determine the adequacy of these budgets on real dollar levels in a particular year, we need to look at the threats that we face the remain substantial. we owe it to the public's to figure out the amount that we think needs to be spent to carry out a national defense strategy, and we have done that.

>> will this lead to determinations of existing contracts? >> i do not anticipate that we will cancel many of any contracts. it is more that we will not become got chills. mccaw -- pick up options. i would like to say to reassure them that we will pay you if you have a contract with us. even under sequestration we will find a time to keep it to the vendors on time. >> if the base number of civilians [inaudible] estimated savings would be? >> we do not know the exact number, it will depend on those exceptions.

50,000 of them are foreign nationals. there will be exceptions to make it smaller. it will depend on the exceptions. that is a process we just started to ask command to identify. >> are there going to be more than 50%? >> i think so. >> temporary term employees that have already been terminated? >> this is an ongoing issue, 6000-7000 are being laid off or are in the process of being laid

off. i think you will see more. for those near term actions, particularly, there were mission critical exceptions. >> [inaudible] >> by the end of this month we would have a pretty good idea. assuming this goes forward, which i sure hope it does not. >> these exemptions, can you tell us more? which employees are exempt? the you have any estimates on how many people might be exempt?

>> we have power down services so that they can review their employees. >> i want to bring you back to our civilian work force. they contribute tons to what we do here in the department and worldwide. saying that, if we have to do this furlough, like the secretary said, exemptions will be relatively small. we have asked services to come back with a plan. we will review the plan with the criteria outlined for exemptions. we do not yet have a number i can give you on who will be the percentage exempt. >> what will life on military bases look like with these closures and shortened hours?

what do you expect to see? >> as i said in the opening comments, i truly believe that our civilians and add such a value to life on a military base. if furloughed, they will see a reduction in some of the services, like for example commissary hours. life on military base, that will impact those individuals who use the commissary. until we find out how this is going to be applied, i cannot give you a daily routine of what a generic day would be on a military base, should we face such a catastrophic event as furloughing or civilian employees.

>> our personnel are committed to carrying out a mission to defend the united states. i think that one thing you are going to see is a great deal of frustration. they will see that they cannot train as much as they need to. if they are dealing with investments that will see disruption in the programs they are managing. so, there will be some aspects of daily life affected. i think that there's satisfaction with the mission will be adversely affected, which is important to these people, civilian and military. >> does the furlough apply to intelligence employees?

as you know, the director of national intelligence [inaudible] >> i do not know that a final decision has been made there. for department of defense employees we will insure consistency, but that is a decision that will have to be made and i do not know if they made it. i think it would be in conjunction with the office of management and budget. >> can you give us a ballpark figure? >> i want to say 25,000. is that right? all right. i had better get back to you. >> is there any indication on the impact of sequestration for the reported efforts?

>> the military processing stations, the testing that is given. recruiters are all military. they are exempt from furlough. the second and third order of the effect of giving someone in can slow the process. >> by the end of this process you have two-thirds, that would be unacceptable levels. will the slowdown?

>> other than those currently employed it would be below acceptable levels. it could affect their ability to deploy to a new contingency of occurred. or if this goes on long enough to afghanistan. >> entirely because of what is laying around? [inaudible] >> that is a variety -- there are a variety of reasons. two years ago when we put together the budget for this year we underestimated the army and the air force. >> can i just follow up on the readiness question?

we have seen a lot of what appears to be scare tactics. on the surface they seem to be pushing out a message of security issue things. what is the reality of readiness here? still at war, the message is the long-term effect. you might have to keep troops on the ground longer. is this something that will be allowed to be pushed down the road? >> we have seven months ago and are short in the base budget by $45 billion compared to the president's request. it is probably close to twice that in the army. i can hope that several things happened. that is the results of sequestration, but also the

current continuing resolution. we might see some action on either one. if neither of them get fixed and it goes through the year in its current form, we will have serious readiness of facts. these are legally binding limits. we will have to cut back on training significantly. >> when the service chiefs were pushed, they said they could move money around further. is that an option for readiness? >> we could try, but the only means of doing that was reprogramming, using very limited techniques. for every dollar that you add, you have to cut somewhere else.

especially in an environment like this one, with sequestration cuts in investment accounts, there are not a lot of good sources. you have to get a member of congress to agree to this, at least all the committees. so, it cannot be anything contentious. it is not realistic to move multiple billions of legal limits on transfer authority. could some of this change? yes. congress can change the laws in ways that make this easier. we are doing worst-case planning right now, that is a fair statement. but if the cr stays in effect for the whole year, we will see serious attacks. >> if i can follow up and add, if we do follow these civilian employees, they are the ones that maintain our equipment in a lot of our depots.

they have a lot of ranges on posts. if furloughed, they will love be there for that training environment. it is the second and third quarter. it is not the training dollars that can be potentially preprogrammed. it is the people for their to utilize and perform the job they're required to do. >> the measures you are talking about are fairly drastic. why wait until today to make these announcements? do you accept the criticism that the pentagon should have been warning about these sooner? >> first, we started the slowdown in spending on january 10. a number of the measures that i mentioned went into effect shortly after that.

significant efforts were made to slow down spending on more draconian actions later. i know that people felt we should have said more earlier. 15 months ago the secretary sent a letter to the u.s. congress saying that the effects of sequestration would be devastating. after that we testified in august and again in september, we listed every single major item we're talking about. we said that there would be cutbacks in readiness and a unit buys would go down with unit costs growing up. what we did not do was detailed budget planning. i do not regret that. if we did it 60 months ago, we would have been wrong. we would not know that congress would have changed the size and date and we would not have

incurred the degradation route. we sounded the alarm in every way that we could. >> what kind of contract are you having with the white house? are you trying to offer up any solutions? sequestration confined to savings hear, hear, and here? what other things would you be doing right now? >> talking to my wife. [laughter] but the answer the first question. i do not think i am of best person that answer. we were very interested in a closely monitoring the events. a more serious answer than spending time with my wife? when i first took this job, it was the last job that i took.

i was told that i would be consumed by the operating side. improving information within the department. others are getting short shrift right now, others are pretty much totally consumed with the department getting through this. >> if this is going to happen and hurt so bad, what about the option of getting to this goal? would that be a strategy for you guys? let's do this instead?

>> i think the president and republicans have made proposals. the implication on bargaining, i am probably not the right guy to be speaking to that, though i am potentially interested in the outcome. >> can you explain the rationale? >> the government enforces agreements and would require some negotiation and in some cases they are paid almost a entirely by the foreign government. that would not help us much. these are all overseas, japanese employees overseas. >> one of the more important benefits. medical care. you mentioned that 40% of the folks were provided with care. that is going to cut into the

services provided, i would think, like elective surgery is being canceled or postponed. what affect is that going to have? you could have thrown that on to try care. >> everything is going to be affected, if sequestration goes into affect. that is a guarantee. everyone will be impacted by this action. it is incumbent upon us to try to ease that where we can. so, yes, 40% of our medical providers are civilian employees. a couple of things. the war has changed. there are fewer uniform providers in the war zones. more within the confines of medical treatment facilities. that is one benefit.

it is incumbent upon us to review the plan of the doctor, surgeons, and services to decide how we will best provide care and access to care. so, we will do that. i would like to be able to give you more specifics, but until i see those plans, though -- that would be speculating and that would not be fair. march 1 i will have a better understanding of how we will provide the access and care to our beneficiaries. >> even if sequestration comes in, we are all talking about just going through september 2013. what happens next year? does it get better? they said that there was not enough time left this year to do that.

>> i cannot rule it out. the budget control act requires that the caps on discretionary funding be lowered to $55 billion per year. if those come to pass, then we will have to look at a new defense strategy. that will be the first thing we will do. at that point we will be talking about significant reductions in the size of the military and civilian work force. flexing a new strategy as opposed to these across-the- board cuts that we face right now. >> are you still facing problems?

>> potentially we could hope for some sort of big budget deal. i would devoutly wish for some budget stability right? i think it would benefit the department and the nation. but absent a deal of that sort, many people continue to face uncertainty into the future. >> what kind of impact will there be on the contractor working for us? >> there are a lot of private sector agencies that have made job loss numbers. i will let them speak for themselves. for sequestration we need to take $46 billion. there would be some additional savings and i do not know for sure what they would be. but there will be $40 billion or so accommodated by cutbacks and purchases in the private sector. lots of different kinds.

there will be very substantial a fax on the private sector as well. i cannot give you a job loss numbers. there are a number of private organizations that have made estimates. >> what specific changes to the law would you like to see congress make to give you more flexibility in managing this challenge? what kind of cuts are you having to make? >> first off, the change what the u.s. congress to make is to pass a balanced budget deficit reduction package and pass appropriations bills. that is what i would like for christmas. i know that it is late, but i would like it. in terms of flexibility, you know, we are five months into the fiscal year.

even if we said you could do it wherever you want, we would have to go after just about every dollar that is not obligated to get the cuts that quickly. i know that there have been suggestions that we could solve this problem by giving flexibility. i do not think it would help that much this far into the fiscal year. i think it is a bad deal, the flexibility. as far as the future at the moment, the guidance we have is not to plan for these large cuts that could occur under the budget control act. if congress does not make a change that the president can accept, yes, we would have to come are related to the other question, look at a smaller military with a symbol -- smaller civilian workforce. >> what number are you planning for in fiscal year 14? >> i cannot give you that until they release the budget, but it is not too far off from the numbers we were planning one year ago.

>> [inaudible] >> i wish that i knew. but they said that in march there would make this decision and i do not have that specific date. >> let me try once more specifically on the service contractor work force. seems like a pretty solid plan. how they will contribute, there is a similar detailed plan, of course. >> it is managed differently. they of course manage their own work force, so we would not be involved in that. we are developing plans with increasing level of details for " we would buy from the private sector and are in the process of looking at our investment

programs. it takes a lot of work to figure out what we would not do to accommodate sequestration cuts. we are moving along well. under the law we have a detailed plan by april 1st that would give more fidelity on executive changes. in terms of managing work force, that will be done by the private companies. >> [inaudible] >> we expect to rollout the base budget in pieces. >> i think that as possible. we need two decisions the we are getting now from the state of the union. we still have to cut the budget together. m